WE’RE A NON-PROFIT AIMED AT ERADICATING CORRUPTION IN PUBLIC SALES VIA TRANSPARENTE-AUCTION PLATFORM

OLEKSII SOBOLEV, CFA

DONE WITH THE SAME TEAM AND TECHNOLOGY THAT WON 2016 WORLD PROCUREMENT AWARDS

BACKED BY

GOVERNMENTS REGULATE, CONTROL, OWN, AND SELL THOUSANDS OF SMALL AND MEDIUM SIZED ITEMS (<$100m)

- REAL ESTATE - LAND- USED CARS - COMPUTERS & FURNITURE - CONFISCATED/BANKRUPT PROPERTY - SCRAP METALS- LICENCES (BROADBAND, NATURAL RESOURCES)- NON PERFORMING LOANS (NPL)- LEASE CONTRACTS

…THEY DON’T NEED OR ABUSE

FOR EXAMPLEG7 NPL, up to

15%* of GDP* in Italy

G7 value of State Owned Enterprises

$1.3tr** for 2013 and latest

CORRUPTION IN ASSET SALES

NOT SELLING AT ALL

SELLING AT A DECREASED PRICE

MISUSE AND ABUSE(a secret lease for cash of a publicly owned car, or even a factory, personal use of a car, etc)

NOT PAYING BACK THE LOAN(e.g. when oligarchs stop paying back the loans to state banks: not selling them = no money)

EXAMPLES

HOW DO GOVs SOLVE THAT? SOME TRY ONLINE AUCTIONS

GOV

BUILDS OWN WEBSITE

HIRES A PRIVATE PROVIDER

EXAMPLEU.S. General Services Administration https://disposal.gsa.gov

EXAMPLEFederal Deposit Insurance Corporation - DebtXwww.debtx.comU.S. Department of the Treasury - CWS Marketing Group http://www.cwsmarketing.com

EACH PROVIDER IS IN FACT A MONOPOLY FOR SALES OF A PARTICULAR ITEM / ASSET TYPE / GOV. AGENCY

THERE ARE SEVERAL PROBLEMS WITH THAT

RESTRICTED ACCESS

COLLUSION

Where there is only one such operator it may refuse to register bidders for an auction for spurious reasons

A single operator knows who will come up for an auction and may sell this information making it possible to corrupt the process

DECREASED COMPETITION

Businesswise thousands of government items are in the government portal, but all the buyers are with the nation’s biggest b2b e-platforms like Alibaba or Amazon

INTRICATE MONITORING

It is hard for general public to monitor results on various websites

HOW DOES PROZORRO.SALE SOLVE THIS? THROUGH INNOVATIVE TWO TIER STRUCTURE

GOV

CDB

LOCAL BANK

API

A state owned central database (CDB) connected to private e-platforms through a secure API

In order to sell something the government just enters the description of an asset for sale into the database

The information gets instantly disseminated to all e-platforms connected to it

Consumers can see the lots on all the websites and place initial bids via them

BIDDER 1 BIDDER 2 BIDDER 3

GOV

CDB

LOCAL BANK

AUCTION MODULE

EVERYBODY SEES

EVERYTHINGBIDDER 1 BIDDER 2 BIDDER 3

INNOVATION & INTERGRITY: SINGLE AUCTION MODULE FOR MULTIPLE PLATFORMS

The central database also houses a real time auction module meaning that all the bidders from different platforms compete in one place, increasing the prices

After the auction ALL the data is disclosed and published as open data through a public API

So, everybody sees everything

EXAMPLE: GOV WANTS TO SELL AN OLD TOYOTA

1. GOV. ENTERS A LOT INTO THE CDB

2. TOYOTA IS VISIBLE ON OTHER E-PLATFORMS

3. BID SUBMISSION FROM ANOTHER PLATFORM

4. REAL TIME AUCTION WITH FOUR BIDDERS*

*4 bidders from different platforms competing online

PUBLIC PORTAL & BUSINESS INTELLIGENCE MODULE

PUBLIC PORTAL

We also have a public non-commercial portal with google-like search at https://prozorro.sale/en where anyone could check auctions

Within 3 clicks users could look up the successful auction with bidder names, contracts or all the information disclosed

PUBLIC BUSINESS INTELLIGENCE MODULE

We also have an interactive state of the art public business intelligence module available for everyone at http://bi.prozorro.sale showing statistics for tens of thousands of auctions

This increases public trust

INTEGRITY & SCALABILITY: COMPLETELY OPEN SOURCEWe are fully open source, so anyone could check that there is no hidden functionality in the auctions

That also allows us to scale easily to other countries: governments could just copy the code, no royalties or permissions needed

Public APIhttp://dgf.api-docs.openprocurement.org/en/latest/index.html

Githubhttps://github.com/openprocurement/openprocurement.auctions.dgf

IMPLEMENTATION: SWIFT UKRAINE SUCCESS

FROM ZERO TO PRODUCTION IN 3 MONTHS

JAN’17 AUG’17

US$850m

US$37k

$90m ALREADY SOLD

US$850m OF ASSETS AVAILABLERIGHT NOW

40 E-PLATFORMS CONNECTED(incl. Ukraine’s biggest b2b platform and biggest bank)

3

10 10

53

11

63

8

17

7

18

26

10

Feb Mar Apr May Jun Jul Aug

DEPOSIT GUARANTEE FUND OF UKRAINE CASE STUDY

7m2017 to 7m2016 SALES INCREASE BY 87%

MAX PRICE INCREASE DURING AN AUCTION: 23x VS 4x

DEPOSIT GUARANTEE FUND MONTHLY SALES, US$m

2016 – BEFORE PROZORRO.SALE

2017 – WITH PROZORRO.SALE

3 weeks Aug

PARTNERS AND CLIENTS

KPMG

EBRD EBRD will recommend using ProZorro.Sale within the “Vienna” initiative for NPL sales in several European countries (e.g. Greece, Cyprus)

KPMG is integrating its deal room www.kpmgdealroom.com with ProZorro.Sale in September 2017

Exclusive seller for Deposit Guarantee Fund (US$19bn AUM)Exclusive lease contracts seller for Ukraine’s state post company “Ukrposhta”Largest Ukrainian SOEs: state oil company NAK Naftogaz, state energy company Ukrenergo, etc.

DONORS

CLIENTS

HOW WE SCALE TO OTHER COUNTRIES

CONNECT BANKS & b2b E-PLATFORMS

COPY & MODIFY THE CODE, LAUNCH SANDBOX

DEVELOP AND APPROVE NEW REGULATIONS

LAUNCH PRODUCT CDB

SIGN AN MOU WITH THE GOVERNMENT

MONTH 1 MONTH 2 MONTH 3

https://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cshttps://www.youtube.com/watch?v=Kv8nFDUk-Cs

https://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgfhttps://github.com/openprocurement/openprocurement.auctions.dgf

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